"If we assume that we'll make one acquisition a year in the next 3-5 years, we'll easily reach $1 billion in sales." This optimistic prediction was made by Perion Network Ltd. (Nasdaq:PERI: TASE:PERI) CEO two years ago. The company has indeed made acquisitions since that time, but $1 billion in sales is still far off, and developments have disappointed Perion. The company is projected to finish 2015 with a mere $206 million in revenue (before the acquisition of Undertone), less than in 2014.
Founded as IncrediMail, Perion began by developing free e-mail applications. Over the years, most of its revenue has come from cooperation with Internet search giants Google and Bing, to which it used to refer users of its software. The problem was that the company became very dependent on those two companies, especially Google. This was seen 18 months ago (and not for the first time), when Google made its policy less flexible, thereby making it more difficult to install supplements that it did not make itself, such as Perion's toolbars and software. This change in policy by Google led to a steep drop in Perion's revenue and profits. A year ago, the company officially announced that it intended to shift its focus from Internet searches, and to put greater emphasis on the mobile market.
Perion has made several acquisitions in recent years, including French company MakeMeReach and US company Grow Mobile. Perion's biggest acquisition, however, was in Israel. Three years ago, the company acquired the toolbars division of Conduit in a shares deal with a derived value of $920 million for the merged company (mainly from the acquired division), most of which has since vanished as a result of changes in the searches sector.
2015 is supposed to be a transition year for Perion, which is trying to reinvent itself in the mobile and advertising segments, while reducing its dependence on the searches segment. The acquisition of Undertone is another step on the way to achieving this aim, and, who knows, perhaps also to the $1 billion sales target.
Published by Globes [online], Israel business news - www.globes-online.com - on December 2, 2015
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